Creating Customer Value,
Satisfaction,
and Loyalty
Chapter Questions
• What are customer value, satisfaction, and
loyalty, and how can companies deliver
them?
• What is the lifetime value of customers?
• How can companies cultivate strong
customer relationships?
• How can companies both attract and retain
customers?
Figure 5.2 Determinants of
Customer Perceived Value
Image benefit Psychological cost Personal benefit Energy cost
Steps in a Customer Value Analysis
• Identify major attributes and benefits
that customers value
• Assess the qualitative importance of
different attributes and benefits
• Assess the company’s and competitor’s
performances on the different customer
values against rated importance
Top Brands in Customer Loyalty
• Avis
• L.L. Bean
• Samsung (mobile
phones)
• Yahoo!
• Canon (office
copiers)
• Land’s End
• Coors
• Hyatt
• Marriott
• Verizon
• KeySpan Energy
Measuring Satisfaction
Periodic Surveys
Periodic Surveys
Customer Loss Rate
Customer Loss Rate
Mystery Shoppers
Mystery Shoppers
Monitor competitive
performance
What is Quality?
Quality
is the totality of features and
characteristics of a product or
service that bear on its
ability to satisfy
Maximizing Customer Lifetime Value
Customer
Profitability
Customer
Equity
Framework for CRM
Identify prospects and customers
Differentiate customers by needs
and value to company
Interact to improve knowledge
CRM Strategies
Reduce the rate of defection
Reduce the rate of defection
Increase longevity
Increase longevity
Enhance “share of wallet”
Enhance “share of wallet”
Terminate low-profit
customers
Terminate low-profit
customers
Customer Retention
• Acquisition of customers can cost five times
more than retaining current customers.
• The average customer loses 10% of its
customers each year.
• A 5% reduction to the customer defection
rate can increase profits by 25% to 85%.
Figure 5.5 The Customer
Development Process
Prospects
Suspects
Disqualified
First-time
Using the Database
To identify prospects
To identify prospects
To target offers
To target offers
To deepen loyalty
To deepen loyalty
To reactivate customers
To reactivate customers
